Chapter 7

Chapter 7 Bankruptcy in Des Moines

Chapter 7 is the most common type of bankruptcy filing. Approximately 80% or more of cases filed are chapter 7. It is generally designed for lower income cases and does not require repayment on most debts, where people filing for chapter 13 bankruptcy generally have a higher income. Most people qualify for chapter 7 based on their income level and expenses. If your gross income is below the U.S. Census Bureau Median Level of Income for your household size you generally qualify for chapter 7. The Median Level of Income is updated periodically, and can be found on the U.S. Trustees website: http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm. Income is calculated using an exact average of your household’s most recent six months income, so it’s not as easy as looking at last year’s tax returns. Even cases that are above the median level of income can still qualify, but it’s a more complicated calculation. A less common way people can qualify for chapter 7 is if more than 50% of their debts are business in nature. We can analyze your income sources and debts at your initial meeting to see if you qualify for chapter 7.

Chapter 7 Bankruptcy with Bachman Law

Although chapter 7 bankruptcy is sometimes referred to as a “liquidation,” in most cases people do not have to turn over any money or property. Generally people get to keep their house and car as long as they can afford any loans against them. People also generally get to keep their household goods/furniture, clothing, jewelry, and qualified retirement accounts (such as 401ks, IPERS, IRAs, etc.). Sometimes if people have extra cars or other property in excess of Iowa’s exemption limits, they have to turn over some money or property to the case trustee assigned. The money is then paid to the creditors on a pro rata basis after claims are filed. It is important to review your assets with an attorney before filing to know if you have any potential unprotected assets.

A chapter 7 case is open for at least 90 days. The whole time period no one can call or bother you. All lawsuits and collection efforts are stopped, although secured creditors may ask the court for permission to continue. Even then, secured creditors only have the right to reclaim their collateral (house or car) and cannot force you to make any payments or bother you in any way. Once the court enters the Order of Discharge, the case will either promptly close or remain open for a few additional months if the trustee is administering assets. The time frame for a bankruptcy filing is explained in detail under the Bankruptcy Filing Process.